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Even though the credit crunch slowed the 0% balance transfer offers I get in the mail, I recently found a good offer for 12 months of zero interest. When the card came in the mail last month, the first thing I did was stick a big "DO NOT USE" post it note on it. While this may seem like a dumb idea if you haven't been slammed by the biggest catch relating to balance transfers, it's the best thing you can do.

For the most part credit cards operate by applying your monthly payment to the portion of your debt with the lowest interest rate; in this case 0%. While your monthly payments are chopping away at the balance transfer offer, your new purchases will begin racking up finance charges almost immediately. This means that even if you only spend $10 on your balance transfer card you'll be accruing interest charges on it until you've paid off your hefty transferred balance.I found this out the hard way when I did my first balance transfer. I got a heck of a deal, offering 0% for life on my balance transfer so long as I made 3 purchases a month with the card. I was overjoyed and quickly set up 3 recurring purchases and a monthly payment from my bank. I was already reveling in the ingenuity of my recurring payment schemes when I took a minute to read the fine print. It was then that I found out that I wasn't actually paying off those 3 monthly purchases but chipping away at my 0% balance first. This meant that the purchases I needed to make in order to keep 0% would be running up finance charges until I paid my transfer off!

I hope you've learned something from my mistake; a 0% balance transfer offer can be a great way to take a chunk out of your debt, but don't put anything else on the card. While I used to spend a bunch of time looking at different creditors to see who has the best balance transfer deals, I found a cool site called CardHub.com which lets you compare credit card offers based on a bunch of criteria including balance transfer offers. Hopefully this advice will help you make better credit decisions; I know it's changed how I use my card.